Tuesday, October 6, 2009

The Trouble with Tort Reform - Part 2: McCoffee, the Real Grounds

The most common example of tort law gone awry I hear cited is the McDonald’s spilled coffee lawsuit.

In case you were living in a cave in 1992, here are the essentials:

A 79-year-old Albuquerque, New Mexico, woman ordered a 49¢ cup of coffee from the drive-thru window. She was sitting in the passenger seat and her grandson was driving. He parked the car so she could add cream and sugar, but when she opened the lid, she spilled the coffee on her lap, burning her thighs, buttocks and groin. She sued McDonald’s and the jury awarded her $2.86 million dollars.

Like most other people, I saw this as a frivolous lawsuit, the kind with which people looking to make a quick buck clog the court system. I changed my view after a product liability lawyer visited my Business Law class at Metropolitan State University in St. Paul, MN and shared the rest of the story:

1) Stella Liebeck, the old woman in the case, wound up with 3rd degree burns over 6% of her body, and lesser burns over another 16%. She spent eight days in the hospital, where she received skin grafts and her weight dropped to 83 pounds. She required follow-up care for two years.

2) She originally asked McDonalds for $20,000, to cover her medical costs. The company offered her $800.

3) She then contacted a lawyer, who filed the now famous suit, asking for $90,000. McDonald’s refused to settle.

4) The lawyer discovered that between 1982 and 1992, McDonald’s had received more than 700 complaints about people being scalded by the coffee, including many involving small children, whose faces were burned when the cups were knocked over and McLava splashed across the counter. McDonald's had settled various claims previously, for amounts up to $500,000.

5) Despite all these problems, including this high-profile suit, McDonald’s refused to change the temperature at which the coffee was served. Why? Because you get the most coffee from a given amount of beans at that temperature and the amount they were spending on scalding claims cost less than using cooler water would.

6) The award, which seemed so ridiculously high, amounted to two days revenue from the sales of McDonald’s coffee world-wide. On appeal, it was reduced to $640K. Ms. Liebeck settled for something less than that.

Based on my posts over the past two days, you'd think I'm totally against tort reform, but I'm not. I'm willing to back ANYTHING that will help get health care costs in this country under control before they kill a bunch more people and destroy any chance America has of competing in a global market.

But before we start making changes, I want to ensure people understand that:

1) This is only a small piece of the health care cost issue and

2) The media only tells you the part of a story that will sell papers, or get ratings, or generate clicks.

10 comments:

You are right that everyone has heard about the lawsuit against McDonalds but I have never heard the reason the coffee was served at such a high temperature! Kind of like Ford knowing that the Pinto would combust in a rear-end collision but didn't do anything about it because it was cheaper to pay the resulting law suits. Don't you love big corporations?

WOW, you are right I have never heard the rest of the story! I just made the same comment an hour ago at McDonald's in person with some friend. We meet for coffee on Tuesday and I remarked this morning the coffee is unusually hot today. They both agree, much hotter than normal.

I found both of these posts very interesting. I do wish lawsuits could be dealt with and can see both sides.

On the one hand, it is out of control. Many people think of a lawsuit like a winning lotto ticket.

On the other hand, large corporations have lost all sense of humanity and integrity, like the scalding coffee. Ever watched the documentary "Wal-Mart, The high Price of Low Cost?"? I can't spend money in a Wal-mart ever since I saw the greed and coruption of the Walton family and Wal-Mart CEO's.

When I was a little kid, my mom and I were shopping at a then small grocery chain called Meijers. They have become a chain with hundreds of stores, and generate billions in sales.. Anywho, I had my arm on the then new conveyor belt that brought the groceries to the check-out person. The skin of my arm was sucked between the metal guard strip, and the belt... Sprained my arm.. they offered a taxi to the hospital(2 blocks away) and would pay for X-rays and treatment.. Mom got a fruit basket the following day, and I got bitched out for getting hurt. That's how it used to be... Today, that's worth a million bucks, easy.